The development power of cell phones

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On June 1st the IFC announced a $40 million dollar loan to Scancom Limited to boost investment in Ghana’s mobile telecom sector. Such investments are among the most fruitful that institutions such as the IFC can make.

Over the course of the last month the development impact of cellular phones and information and communications technology (ICT) has received considerable attention; in large part due to the recent Vodafone publication: "Africa: The Impact of Cellular Phones" – which was recently succinctly summed up in the Economist. This study details how cellular phones are a key tool to many developing country entrepreneurs – and how they are used for far more than simply coordinating going-out plans with friends or sharing spontaneous pictures. The authors constructed a model which suggests that that in a typical developing country, an increase of 10 mobile phones per 100 people will boost GDP growth by 0.6 percentage points. For more, see this recent AEI event where the Vodafone publication authors presented their findings and commented on the implications of their research.

The developmental impact of cellular phone may perhaps be most important in conflict-affected countries. Early cellular investments not only create an essential communication backbone for a conflict country (where infrastructure has normally been severly disrupted, if not destroyed, due to the conflict), but also present governments with a unique opportunity for demonstrating a good relationship with the private sector and not encroaching upon it with unfair regulations and oversight. For more on this unique dynamic in post-conflict countries see this recent discussion which even benefited from the participation of Afghanistan’s former Telecom Minister.

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